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Monday, August 13, 2012

Romney's 98 Page Millstone, Courtesy of Rep. Ryan

Been devoting all your time to the Olympics this week? Have you, like me, been talking less about the sports and more about NBC awful coverage? Then maybe you missed the news that Gov. Romney selected Rep. Paul Ryan to be his running mate. Now a lot of the smart money had been on Sen. Rob Portman of Ohio, but I'm on record thinking that if Romney went "outside the box" that would lead to Paul Ryan. Rep. Ryan is more exciting (just barely) than Sen. Portman, less confrontational than Gov. Chris Christie, less green than Sen. Marco Rubio, and more everything else than Gov. Tim Pawlenty.

But Rep. Ryan comes with one big problem for Romney. He's very very specific about the changes he would make to federal spending and the tax code. Like, nearly 100 pages specific. Remember a week ago when the Brookings Institute's Tax Policy Center said Romney would have to raise taxes on the middle class to make his sketch of a tax plan revenue-neutral? Remember when Romney's campaign said the study, put out by a highly respected think tank that gave every possible positive assumption to Romney, was "a joke?" Well, Romney could bob and weave on the study because conservatives have been living to discredit studies that have anyone associated with it who once breathed on a Democrat. He could have gotten past that.

Why do I describe Ryan's plan as a millstone? Take it away Washington Post:

His proposals contain three major elements:First, the Ryan plan would overhaul the entitlement programs that have grown to consume about 40 percent of the budget, reshaping Medicare coverage for the elderly, and cutting deeply into Medicaid, food stamps and other programs for the poor. Second, he would rewrite the tax code, slashing the rates paid by corporations and the wealthy. Finally, Ryan would cut spending on other federal programs and agencies, with the exception of the Pentagon. Most controversial is Ryan’s proposal to transform Medicare so that the government, rather than paying for health care for the elderly directly, would give beneficiaries a set amount of money to shop for a private health insurance plan.

Now, without a doubt, there is a certain segment of the Republican party that will get very excited about this plan, but I don't think you'll excite too many undecided independents with that plan. Lest we forget, Newt Gingrich said the Ryan plan was "right-wing social engineering." Of course, now that Ryan's on the ticket, Newt's position on the Ryan budget plan has evolved. The point being, Romney didn't need to tap Ryan to be VP. He could have tilted toward the Ryan plan, without totally, completely embracing it and lived in an ambiguous policy space until the election. The math was not on President Obama's side. Romney didn't need to rile up his base, considering a fair percentage of that base believes the entire Obama presidency is illegitimate anyway, and I'm even sure Ryan does that.

But what Ryan does do it change the decision making process for discontented independents. Until this weekend it was pretty straightforward: Do we stick it out with Obama, or do we make a change to Romney? Now the decision becomes: Do we want to gut government programs and remove safety nets for the less fortunate or do we want to keep those programs?

I was tempted at the end of last week to write up a post about how petty this presidential race has been so far. It appears we could have the sweeping ideological debate that this country needs, provided we can all be honest about what these choices mean. And I think that's good for the country, but I'm not so sure that's good for candidate Romney. But hey, if this election doesn't go his way, maybe he can go to NBC and fix their Olympic coverage in time for Sochi. NBC sucks.

12 comments:

Do we want to gut government programs and remove safety nets for the less fortunate or do we want to keep those programs?

I am unaware of any proposals by Ryan to end any aspects of the safety net. In fact, the article you linked to says the following:

Over the next decade, Ryan plans to spend about 16 percent less than the White House on “income security” programs for the poor — that’s everything from food stamps to housing assistance to the earned-income tax credit. (Ryan’s budget would authorize $4.8 trillion between 2013 and 2022; the White House’s would spend $5.7 trillion.)

$4.8 trillion may be a lot of things, but an end to safety nets it certainly is not.

You said "remove" and then said "or do we want to keep those programs," which implies they would otherwise be ended.

Furthermore, given that current spending on income security programs in the midst of 8+% unemployment is $466 billion , the idea that Ryan's proposed budget -- which works out to an average of $480 billion per year on such programs -- represents a cut is rather silly. At worst, this is just more of the same.

There is no grand choice here. One guy wants spending levels to continue pretty much as is -- which is to say, massive -- and another wants even more government. The notion that this election represents a vision of programs being "gutted" and safety nets being "removed" versus merely keeping them is a complete mischaracterization.

I don't think cutting all federal spending outside of Medicaid, Medicare, and Social Security down to 3.7% of GDP is the status quo.

Why are you measuring as a percentage of GDP? Why not use actual budget numbers? As shown, Ryan proposes spending trillions -- literally, trillions -- on income security programs over the next 10 years. This is not a cut, it's the status quo.

We can also place Ryan vs. Obama in graphical terms. You can find another chart here. Ryan spends more, while Obama spends much more.

I'm sorry, but this is just wrong. Obama isn't laying out an agenda of paying a bunch more.

Yes, he is. Just look at the charts provided above. Obama projects spending in 2017 to be $4.5 trillion -- an increase of $1 trillion since GWB's last budget request. Some people might consider a trillion dollars to be real money.

Why are you measuring as a percentage of GDP? Why not use actual budget numbers?

I didn't measure it, Ezra Klein & Paul Ryan did, but it seems like a fair measure given the time value of money. Come now Colin, you're better than to suggest we should look at nominal dollars over a decade.

I didn't measure it, Ezra Klein & Paul Ryan did, but it seems like a fair measure given the time value of money. Come now Colin, you're better than to suggest we should look at nominal dollars over a decade.

Why wouldn't we? It's a superior metric. To illustrate the point I will use the defense budget via this chart from the Council on Foreign Relations.

Note that in 1990 the US spent roughly $400 billion ($660 billion in 2010 dollars) on national defense and somewhere around 7% of GDP. In 2010 the nominal amount was around $800 billion while the percentage of GDP was 5.5.

Thus, as a percentage of GDP, defense was cut, when in reality spending was up by about $140 billion. Saying that defense spending was cut would be nonsensical.

So again, why are we using percentage of GDP instead of nominal numbers?

Gee, I don't know, maybe because our economy grows over time and money loses value over time due to inflation?

Well yes, the fact that the economy grows over time, thus changing the denominator, is why percentage of GDP is highly problematic -- as I have already demonstrated. Or perhaps you believe that from 1990-2010 that the defense budget was actually cut because it declined as a percentage of GDP?

Anyway, since you are unwilling to provide the nominal numbers and equate this with a chasing of the tail, I decided to go ahead and do it for you. According to the CBO, the Ryan budget's projected federal spending excluding social security, medicare and interest payments is $1.74 trillion in 2023. The Obama budget projects spending at somewhere around $2.15 trillion in 2022. I'll call it $2.25 trillion for 2023 for an apples to apples comparison.

If we use an inflation calculator and assume historical levels of inflation will continue, that $2.25 trillion is equal to $1.8 trillion in 2012 dollars. Ryan's proposed spending comes out to $1.4 trillion in 2012 dollars.

Now, while Ryan's budget would spend more, given population growth, in reality this amounts to probably a slight decrease in spending.

Thus, this seems to further confirm my argument that this notion the coming election presents a sharp divide is mostly hot air. The Ryan budget would, at its most draconian, slightly trim current spending while the Obama budget, at the very least, merely continues the same path.

The idea that we are faced with safety nets being removed and government programs being gutted under a Ryan budget scenario does not appear to have much basis in reality.

While they haven't been the topic of this exchange, both Medicaid and Medicare are safety nets. His plan would have dramatic consequences for both of these.

Sure, and doing nothing also has dramatic consequences (crushing the rest of the federal budget). President Obama's plan also has dramatic consequences (cutting Medicare by $700 billion). There are dramatic consequences regardless.

And you were quite the champion of Ryan's Roadmap. Are you walking that back now?

You'll have to refresh my memory. In April of last year I commented that Ryan's plan uses "wildly optimistic assumptions" and is "too mild" with "even deeper cuts required than what he outlines." In May I noted that Ryan had refused to specify which tax loopholes he would close and said that I wasn't "interested in defending Paul Ryan, whose budget I don't think cuts nearly enough." In March 2010 I called his 50+ year time horizon for the budget "a bit silly."